From left, President Donald Trump and Gov. Gavin Newsom.
Credit: Official White House photo / Molly Riley and AP Photo / Rich Pedroncelli
For all of their differences, California Gov. Gavin Newsom and U.S. President Donald Trump have one thing in common: both are stealing from the future to pay for their budgets.
Trump’s thefts take the form of budget deficits that are financed by issuing U.S. Treasury securities that must be paid back by future budgets, plus interest, with money that future governments won’t be able to use for their own services. His latest budget is expected to add $4 trillion to the national debt.
Newsom’s thefts take the form of drawing from budget reserves that are supposed to be used to provide services during recessions and borrowings from Special Funds that are supposed to provide special services. Newsom has taken so much from budget reserves that his own Department of Finance forecasts the next governor will face his or her first budget without reserves. He also skips or shorts deposits to retirement funds that set aside money for future retirement payments to employees.
How did Trump and Newsom end up with deficits during an economic expansion? The short answer is that Trump cut taxes while Newsom increased spending. Deficits are expected to continue in both Washington, D.C., and Sacramento. To make matters worse, by issuing budget debt during economic expansions, Trump and Newsom set up future governments for a double whammy during recessions when those governments will have to cover Newsom’s and Trump’s thefts, even as their own tax revenues fall.
Another thing Trump and Newsom have in common is throwing people off of Medicaid rolls while throwing money at favored classes. Trump’s latest budget subjects adults to work requirements, reduces funding and adds administrative hurdles, while Newsom’s latest budget imposes asset limits, freezes enrollment of new undocumented adults, and levies new fees on enrollees. Trump’s favored classes are corporations, higher-income taxpayers, tip-based workers and Social Security recipients who got tax cuts, while Newsom’s favored classes are government unions that got more jobs and higher salaries, and entertainment companies that got more corporate welfare.
Trump and Newsom aren’t the only ones budgeting with thefts from the future. In his most recent budget, Los Angeles Unified School District Superintendent Alberto Carvalho skipped an annual contribution to a fund set up to cover health care costs for retired employees. You would think he would know better since a principal reason for the deficit he is struggling with is past skips and shorts that have led LAUSD’s annual spending on retirement debt to nearly triple over the last 10 years to nearly $2 billion per year.
Each has their own reasons for their actions — Trump asserts that tax cuts will eventually produce more tax revenues, while Newsom and Carvalho assert that deficit spending is needed now — but all are adding to past thefts that are already robbing citizens of huge levels of resources. The federal government is already spending more every year on interest than the $833 billion it spends on defense; California is already spending as much on bonded and retirement debt than on the $23 billion it sends to the University of California, California State University and California Community Colleges systems combined; and LAUSD is already spending nearly 20% of its revenues on retirement costs.
By their actions, Trump, Newsom and Carvalho have just added to those burdens. Our country desperately needs leaders who care about the future.
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David Crane is a lecturer in public policy at Stanford University and president of Govern for California, a political philanthropy that works to counter special interest influence over California governments.
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